Toronto’s condo market has been in meltdown for months – and while other major Canadian cities have been spared a similar slump, the outlook for condo buyers in Vancouver is also darkening.
In August, the average condo price in the city slid by 4.4% compared with the same time last year, and by 1.3% from July. Sales, meanwhile, were just 956 for the month – 5.5% lower than August 2024 – as buyers continued stepping to the sidelines.
That’s a less dramatic cooldown than in Toronto, where prices have dived even further. Last month, the average price of a condo across the Greater Toronto Area (GTA), including the city and its surrounding areas, had plunged to $642,195, well below Vancouver’s average of $734,400.
Still, there are few positive signs for the condo market outlook in Vancouver, according to DLC Clear Trust Mortgages broker Anthony Zhang (pictured top).
He told Canadian Mortgage Professional the Bank of Canada’s decision to cut interest rates last week, and the prospect of at least one more reduction before the end of the year, might spur a slight uptick in overall activity across the market.
But the condo space, especially pre-sale units purchased before construction on the building began, is likely to see further distress amid growing signs of appraisal woes facing buyers and investors.
“Rate cuts will definitely help. I think the end of October [decision] will see another cut. But that’s it for the year,” Zhang said. “I think the markets will slightly pick up in terms of transactions but the condo side will still be tough, just given that with a lot of pre-sales, after they complete, so many sellers are very anxious to sell.
“They’ve dropped the prices a lot. In Vancouver over the last few months I do see the appraisal values dropping significantly.”
Sellers take huge hits, appraisal woes continue
Good news for some buyers and investors: the picture is by no means the same across all condo types, with the market for one-bed condos in the city remaining fairly robust.
But it’s a different story for two-beds and larger condos, where Zhang said it’s not uncommon to see sale losses of more than $100,000 on a single unit and lenders slashing loan-to-values (LTVs) to as low as 55% per condo.
Unsurprisingly, that’s made it increasingly difficult to secure financing for some pre-sale condos. A worrying Toronto trend has also made its way westwards: buyers simply choosing to abandon their purchase, walking away from an enormous deposit on the table and leaving themselves open to potential legal action by builders and developers.
Other buyers who decide to stick it out are left with a tough choice. “When the pre-sale completes, a lot of listings are coming up because some buyers – if they do a private loan, a high-interest-rate loan, have to get rid of the unit ASAP,” Zhang said. “I foresee that there will be a lot of units that are going to come up for sale.”
A gathering storm – but still a more positive outlook than Toronto
Some buyers who don’t have a cashflow problem might be prepared to hold their property, rent it out, and see how the market goes over the next couple of years. But others don’t have an option. “They have to sell it right away,” Zhang said.
“So I would say it’s going to be tough for the next year at least. With the pre-sales coming up for completion, the market seems like there’s not enough buyers for those condos.”
That means condo inventory is likely to increase in Vancouver in the months ahead, likely putting further downward pressure on prices and rents in the city.
But the outlook isn’t quite as gloomy as in Toronto, where thousands of new units are scheduled to hit the market even as demand slumps. “In Toronto, there are too many high-rises. There’s too much supply,” Zhang said. “In Vancouver, we have fewer high-rise buildings and our downtown is already packed. So there are not that many buildings coming up.
“The inventory will still be very high, given that the buyers can’t absorb all the supply. But I feel like it will be slightly better than Toronto. We’ve got less supply in terms of total amount. Rents have dropped a lot, but there will still be renters everywhere. So I think it will be bad – but not as bad as Toronto.”
CMP
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